Running Head: Topics of Human Resource Management BUS 9300 1

Running Head: Topics of Human Resource Management BUS 9300

Topic: Human resource management practice and institutional constraints: The case of Ghana Introduction The human resource is the most productive of all resources, the most versatile, and the most resourceful. The purpose of this study is to explore the nature of contemporary HRM practice in Ghana, and the extent to which "best practice" HRM strategies are likely to emerge, given present institutional realities.

Background to the Study An enterprises wealth does not depend on the financial and material resources available but rather on the people who make things work. It is therefore important for owners and managers of firms to understand how best to manage this most resourceful; human resource of the firm. Within the developing world; given the weakness of regulatory institutions in many national contexts, and an inability or unwillingness of governments to intervene on the behalf of domestic industry in the face of intensified global competition it is likely that firms will find it particularly difficult to adopt policies that entail significant investments in people and supporting infrastructures that do not result in short-term benefits. Therefore the contributions of the institutional framework is key is the growth of every industry. How the presented literature reviews relates to various learning objective of the course. LO 1 - Synthesize the need for human resources in relation to the strategic direction of the business and the role of human resources management in strategy formulation The practice of HRM in Africa has been based on procedural and administrative tasks such as salary and benefits, employee relations, absenteeism and grievances among others

Running Head: Topics of Human Resource Management BUS 9300

(Akinnusi, 1991; Taylor, 1992). This assumption limited HRM issues to an operational dimension at the expense of its strategic approach which should have viewed the employees as the most valued assets of the organisations. Added to this is the fact that organisations in Africa appear to adopt a reactive approach to the hostilities in the environment thereby neglecting the know how and expertise that HRM brings to the table (Kamoche 1997) Clearly, the above points emphasize the strategic importance the authors placed on the human resource management and went ahead to suggest that most organisations are not doing well in Africa because they had place lesser value on their human resources. This means that the importance of HRM practices is universal and that geography does not matter. However, there is a growing awareness to formulate and pursue HR activities such as recruitment, selection, rewarding, performance management, training, and development in line with the mission and strategic objectives of firms (Kamoche, 1997).This approach, appears to recognize the critical nature and role of the employees in organisations as strategic partners in a challenging competitive environment. Those same points raised by the above authors also sits well with the learning objective two which states that Propose how human resources practices can and should contribute to business goals and help to improve the quality and effectiveness of the companys product or services.

Ghanaian Context The rest of the literature tried to look at the various issues in Ghana since the intended study was case specific.

Running Head: Topics of Human Resource Management BUS 9300

Ghana like many African countries has gone through a number of socio- economic reforms since Independence in 1957. These reforms began with state led economic activities through to the Economic Recovery Programme in 1983 to HIPC in 2001. At independent, the philosophy was that government has a business to be in business because the indigenous private sector could not be trusted (Asante, 2000) to lead the economy to prosperity. The private sector in Ghana just like some developing countries was therefore perceived as exploitative of the poor (Prahalad 2009). In the introduction to the Seven- Year Development Plan, it was stated among other things that Ghana has chosen a socialist form of society as an objective of her social and economic development which is based on the belief that only a socialist form of society can assure Ghana of rapid rate of economic progress. Thus, the economy must be developed rapidly and efficiently so that within the shortest possible time assures a high rate of productivity and high standard of living for each citizen. Never must public want and private affluence be allowed to coexist in Ghana (Seven Year Development Plan 1963/64; 1969 -1970:1-2) These led to a large number of government enterprises from textiles and garment factories through transportation to distilleries. Unfortunately many of these enterprises collapsed due to a host of factors which are beyond the scope of this paper. The National Liberation Council Government which overthrew the Nkrumah regime in 1966 and the civilian government that took power in 1969, adopted capitalist economic approach to managing the economy but that could not also yield the desired results as disagreement over the strategies coupled with political instability over the years frustrated the efforts. In 1983, The PNDC presided over the adoption of the Economic Recovery Programme with its antecedent Structural Adjustment programmes. The launch of these programmes refocused attention on the private sector with a paradigmatic shift in philosophy to government has no business be in business. The private sector was then tooted as the engine of growth of the economy. Perhaps due to the dominant logic built for over the years

Running Head: Topics of Human Resource Management BUS 9300

(Prahalad 2009) and also partly due to the poor state of the economy, the speed of recovery of the private sector response have been slow and not been satisfactory (Dimova, 2009). In trying to reverse the trend and to encourage the private sector to lead economic development of the country came with it aggressive policies to promote private enterprises which led to the proliferation of small and medium sized firms across the length and breadth of Ghana. Today, the major players in the political economy of Ghana namely the ruling National Democratic Congress and the Opposition New Patriotic Party have all made private sector development the centerpiece of their policies (Ghana Poverty Reduction Strategy II 2006-2009; Vision 2020).Ghana currently has a sustained GDP growth rate of between 3 and 6%. Inflation which was 42% in 2001 is down to an average of 10% (Dimova 2009). The country is therefore getting closer to attaining a middle income status by 2020 of which the private sector is expected to play a leading role. The focus on private sector development obviously has implications for human resource management issues especially in small and medium sized firms where the dominant role of owners of these firms could be felt. Whilst studies focused on finance and capital issues in the small and medium sized firms, there appears to be little or no research on the HRM within these firms. This research though exploratory, is an attempt to provide some information on HRM practices and challenges in Small and medium sized firms in Ghana. HRM Practices It often argued that two distinct clusters of practice of people management practices are identifiable (see Storey, 2001; Applebaum et al, 2000; Kochan and Ostermann, 1994). First, there are the "high value added" approaches that base competitiveness on high levels of employee-employee interdependence and delegation to employees (Pfeffer, 1994; Ulrich, 1997; Applebaum etal, 2000; Kochan and Ostermann, 1994). Such approaches are characterized by high levels of investment in training and development, high levels of job

Running Head: Topics of Human Resource Management BUS 9300

security and innovative reward systems; in turn, these facilitate greater levels of participation and involvement (Applebaum et al, 2000). Permanent employment reduces turnover, whilst investing in people and job redesign, enhances organizational commitment, providing fertile ground for far-reaching involvement programmes (Lincoln and Kalleberg, 1990). second, there are approaches that seek advantage over competitors by cost-cutting measures, such as downsizing, a reduction in security of tenure, reduced investment in training and development and the greater use of sub-contracted labour (Storey, 2001, pp. 14-15). However, it should be noted that the high/low raw debate is very specifically focused on the strategic choices open to firms. It is argued that whilst there is considerable evidence that many firms adopt the low road or "bleak house" scenario, there is rather less evidence that significant numbers of firms have implemented integrated high road/high commitment sets of human resource policies, rhetoric and formal policy commitments to the latter effect notwithstanding. In different institutional and cultural settings, other combinations of practices are likely to emerge (Lincoln and Kalleberg, 1990). Within the developing world - given the weakness of regulatory institutions in many national contexts, and an inability or unwillingness of governments to intervene on the behalf of domestic industry in the face of intensified global competition (Greider, 1997) it is likely that firms will find it particularly difficult to adopt policies that entail significant investments in people and supporting infrastructures that do not result in short-term benefits (see Hoogveld, 1997). However, despite these pressures, specific cultural practices and institutional configurations may make for certain continuities (c.f. Lincoln and Kalleberg, 1990). Hence, a central focus of the debate on African HRM is not so much between whether high or low road strategies are becoming more prevalent, but whether the pressures

Running Head: Topics of Human Resource Management BUS 9300

associated with globalization have made "low road'Vbleak house" practices the norm (Greider, 1997), or whether African firms continue to adopt a specific model that may, in many respects, seem autocratic, but is based on a conceptualization of paternalism, underlain by conceptions of personal ties, duties and obligations (Ovadje and Ankomah, 2001, p. 183). These valid point raised by the authors above re-echoes the institutional difficulties and challenges which confronts HRM practices in developing countries. Clearly this is LO5; Synthesize the international dimensions of HRM in globalized, multinational organizations Indeed, it can be argued that the intensification of global competition, the decreased range of policy options available to national governments, and the increased mobility of financial capital have placed renewed pressures on firms to enhance their competitiveness (Duysters and Hagedoorn, 2001, p. 348). As their power to set prices is eroded in the face of intense competition, profitability increasingly depends on cutting the costs of inputs, making labour repressive policies highly attractive (Wood et al., 2004). Massive job losses have become a feature of the "shock therapy" adjustment policies inflicted on emerging markets, further weakening the bargaining position of labour (Hyman, 2003). Indeed, it has been argued that "capitalism has restored its worst excesses on the periphery", characterized by steadily worsening employment conditions, including low standards of health and safety, extremely low pay, arbitrary management, a near total lack of job security, and the discounting of skill (Greider, 1997; Moody, 1987). Other accounts have suggested that specific African countries have developed their own modus operandi in the face of both cultural legacies and volatile external circumstances. The latter includes fluctuating exchange rates, political instability and changes, an unreliable infrastructure, inappropriate governmental policy choices, and "widespread ambiguity surrounding the rule of law" (Erondu, 2004, p. 3). This has translated into excessive short-

Running Head: Topics of Human Resource Management BUS 9300

termism (Erondu, 2004, p. 3), and a reliance on _ structures of authority that are likely to prove resilient to external shocks (Jackson, 2002). Citing the Nigerian case, Ovadje and Ankomah (2001, pp. 183-5) argue that this has translated into a model where older male managers assuming a patriarchal role, the consistent marginalization of women, and recruitment drawing on the extended personal patronage networks (Oradje and Ankomah, 2001; c.f. Beugre, 2002). Whilst employees may often have to put up with low wages and poor working conditions, firms may provide informal ad hoc financial assistance, and are willing to adjust pay rates in response to external developments, such as increases in transport costs. Nonetheless, poor motivation, risk aversion, close supervision, little delegation and an unwillingness to take independent action may result in alienation, low productivity, poor morale, and the perpetuation of low wages (Jackson, 2002, p. 1006). Again, this also answers the objective of the LO8; Assess the major federal laws and/or international equivalents that affect human resource management within the company And finally, the points below relates directly to the LO10; Debate the importance of job analysis in strategic and human resources management. Training tends to be culturally specific, practical and founded on a "community concept of management", whereby individuals are not so much employed in terms of a fixed contract, but wedded to a community (Erondu, 2004, p. 6; c.f. Beugre, 2002). However, the predominance of informal training also reflects a reliance on export led primary production and underdeveloped consumer markets (Jackson, 2002, p. 999). The intensification of competitive pressures as a result of structural adjustment policies has made it even harder for firms to invest in formal training systems (Jackson, 2002, p. 1000). Managerial styles tend to be control orientated with an emphasis on process and hierarchy, drawing on pre-colonial notions of chiefly power (Beugre, 2002) and/or colonial autocracy (Jackson, 2002). Attempts to introduce contemporary Western approaches, based around objective managerial systems,

Running Head: Topics of Human Resource Management BUS 9300

including clearly demarcated and formal employment contracts, and recruitment procedures that are open to all, often fail as a result of deeply embedded perceptions by both managers and employees that they are overly "academic" and impersonal, as well as "insider" clan or ethnically based group interests (Jackson, 2002, 2004). These trends - autocratic but paternalist management, informal and patronage based recruitment networks, and a sense of mutual duties and obligations - emerge as a common theme in case studies of numerous African countries (c.f. Kamoche, 2001, pp. 210-20; Jackson, 2002). However, it should be noted that these practices do not form a totally monolithic model reflecting different historical experiences (Jackson, 2002, p. 1008). Moreover, managerial practices cannot be dismissed as uniformally "backward" or despotic; in specific contexts, practices incorporate emerging alternative and innovative managerial systems (Jackson, 2002, p. 1008). Common to this growing body of critical literature on HRM in Africa is a concern that, despite considerable diversity in practices, outcomes remain generally suboptimal (Kamoche et al., 2003; Kamoche, 2002; Frynas and Wood, 2003). The latter represents a product of weaknesses in political institutions, lop-sided economic growth, intense international competition and unfair terms of trade, inappropriate and misdirected foreign aid and the persistence of practices (such as patriarchal authoritarianism within both the firm and community) that are incompatible, with "contemporary industrial imperatives" (Kamoche, 2002, pp. 993-5; Hyden, 1983). As Harvey (2002) notes, institutional parameters represent the default boundaries of organizational behaviour, and, hence, mould organizational strategic responses. In other words, contextual realities - of both the cultural and sociopolitical variety - mediate and reshape HRM interventions (Horwitzeia, 2002). Terminology and Definitions

Running Head: Topics of Human Resource Management BUS 9300

Storey (1992:5) defines human resource management as a distinctive approach to employment management, which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an integrated array of cultural, structural and personnel techniques. According to Hodgson (2006) defined institutions as systems of established and prevalent social rules that structure social interactions. In other words, language, money, law, systems of weights and measures, table manners, and firms (and other organizations) are thus all institutions. Short Description of Selected companies The firm selected for the successful application of best practices is a quasigovernment engineering consulting firm called Westwood Engineering Consulting. The firm was established in the 1980s to cater for all engineering consultancy services of public projects in Ghana. The government sold its majority shares in the 90s but still maintains its managerial influence. Westwood present a unique preposition for the study so I intend to use the use the same firm for the two scenarios. Successful Application of Best Practices The professional services firms sector like Westwood Engineering Consulting, by definition, sells knowledge. The corporate reputation of firms that sell knowledge is defined by the commitment and performance of its professionals, which will dictate the perceived value of their knowledge and experience (Nuria & Rodrguez, 2010). Any difference which may exist between the true value and that perceived by the company will gradually be corrected over time, meaning that it will be the combination of knowledge plus applied experience possessed by professionals, which will act as the key factor in establishing the

Running Head: Topics of Human Resource Management BUS 9300

competitive edge of Westwood. The firm has done extremely well in dealing with its labour issues. So far, it is the only company in Ghana with government involvement which has never gone on strike. Its compensation packages are used as industry benchmark and every Engineer at some point wanted to work at Westwood. The key for their HR success had been Leadership. Their management has been proactive and have shown strong leadership. In spite of their successes, Westwood has done poorly at talent management and this is the basis for their being used as a study unsuccessful Application of Best Practices. Unsuccessful Application of Best Practices Problems and Challenges of Talent Management All the talent management practices discussed so far are intended to achieve one common aim: maintaining intellectual capital within organizations as a differential resource, the basis for their competitive edge. One critical challenge of Talent Management at Westwood is the confusion its meaning brings to the outside board-room staff of the company. Most people wonder and ask the following questions. "What do we mean by 'talent? Talent for what? If I am talent, what will 'managing' me mean? What if I am not talent? And if I am a manager, will I need to tell some people that they are not as talented as they thought they were?" Again, more other employees at Westwood often fear that talent management will cut across equality of opportunity and the transparent processes that allow people to apply for higherlevel jobs in order to further their careers. Other key challenge of talent management has been presented under the following headings below: Recruitment and selection practices Challenges

Running Head: Topics of Human Resource Management BUS 9300

At Westwood, professionals with great potential but little experience are hired as junior consultants, and then later fill senior consultant vacancies through an internal promotion. Westwood only turns to the external market if they do not find appropriate candidates within their organization, or as a result of specific outside circumstances (external benchmark salaries lower than those seen internally, or political circumstances making it advisable to hire outside, among others). The challenge for Westwood therefore is how they could guarantee the quality of their selection process. The consultancy organizations consider selection to be one of the central strategic planks in their acquisition of intellectual capital, a differential resource which is directly connected to their economic activity (Nuria & Rodrguez, 2010). This dictates the specialization and considerable volume of resources dedicated to this process, compared with other sectors. In addition to the high financial costs involved, this also leads to a time lag in the process, ranging between one and three months in the case of junior consultants, and between one and six months in the case of seniors. One final aspect, which such companies tend to consider within this practice is the risk involved in the possible departure of the candidates ultimately selected. Some companies use the investment made in selection by consultancy organizations as a means of ascertaining the soundness of the candidate, thereby avoiding the need to take on such high financial costs, and then presenting offers to candidates previously selected by consultancy companies. Professional development practice Challenges In terms of professional development practices within the consultancy sector, the intellectual capital of an organization's professionals constitutes the productive capacity of the company itself (Warren and Kourdi, 2003). The value of such professionals for the Westwood depends on whether the accumulation of knowledge and experience has generated valid skills, which

Running Head: Topics of Human Resource Management BUS 9300

are required by the organization. The challenge for Westwood again in relation to professional development is how the company could fine-tune the various skills development process in order to accelerate their employees' learning processes. Moreover, one of the central planks of the HR strategy at Westwood Consulting is its organizational capacity to speed up the acquisition of knowledge and skills by its professionals. This capacity serves as a tool for improving companies which belong to other sectors, through the advice of expert consultants within each field of operations. Retention practice Challenge Globally, the consultancy sector is noted for having one of the highest staff turnover percentage rates in the market because of that, managers use the "up-or-out" policy (Stearman, 2000). In this policy, managers allow mid-level staff to depart if managers unable to promote them to senior level because there are no opportunities to grow in the market. Although, the organizational structure of this type of company is based on the constant renewal of junior consultants, the departure of professionals with key skills may represent a significant loss of intellectual capital, thereby impeding the acquisition of a competitive edge by such companies (Godbout, 2000). This situation is current taking place at Westwood. Within the last five years, more than 50 junior professionals left the firm because their promotions were overdue. Various reasons have been presented by expert commentators in support of the above statement. First, the unforced departure of junior consultant candidates for promotion to the senior category means that the company loses its most profitable professionals in terms of their salary cost/professional service rate ratio, preventing the organization from recovering all the resources invested in developing such professionals (Peteraf, 1993).

Running Head: Topics of Human Resource Management BUS 9300

The difficulty of predicting the number of experienced consultants who will leave, and also the point in time when their departure may occur, presents huge problems when attempting to plan the process of junior consultants' professional development (Peteraf, 1993). A vacancy brought about by the departure of an individual can often not be covered by a professional with similar skills, placing the company in an awkward dilemma: delay the project until a suitable replacement has been found, or bring in a less qualified professional. In both cases, the company is likely to see a negative impact on its reputation as a knowledge organization. This is also a big challenge to Westwood Consulting. Conclusions and Recommendations It is clear that the globally competitive advantage is currently being shaped the amount of talent available to each organisation. Therefore, it is imperative that individual talents are harnessed for the benefit and survival of every organisation. To the individual challenges above, in order to guarantee the quality of the subsequent selection process, management consultancy companies generally deal with differing ratios for the minimum number of recruits to be evaluated for each pre-selected candidate. This means that only those candidates, who have passed through the initial recruitment process filter, will be invited to take part in the organization's selection process. Once a target has been set for employment contracts, and in order to underpin the quality of the selection process, companies generally deal with a previously selected portfolio of candidates, from whom they select those who best match the required professional profile. Secondly, in order to fine-tune this skills development process, consultancy companies generally dedicate considerable efforts to the development of training and development programs intended to accelerate their employees' learning processes. The results of these practices will be closely tied to the professional career of consultants, in addition to the

Running Head: Topics of Human Resource Management BUS 9300

number of projects which they will be able to take on with guaranteed levels of success. In order to do so, in addition to recruiting and selecting individuals with considerable potential for learning, investments must be made in training programs and professional development. These investments are considerably higher than those incurred by other sectors, through personal training plans, remote training, and attendance of specialist programs and involvement in projects as support staff at no cost to the client, among others, while also facilitating access to knowledge management systems allowing the learning curve to be steepened. This process will give rise to the creation of consultancy professionals with the talent to take on a lead role on projects, with promotion from junior to senior category generally coming within a period of between two and five years, depending on the nature of the field of activity and the capacity of the organization, while also swelling the ranks of those junior consultants ripe for promotion to a senior position during the next professional review. The number of junior consultants completing the professional development process required in order to be promoted to the senior category will also be reduced by the outgoing flow of junior consultants hired by other opportunistic companies.

Furthermore, although the high rate of professional staff turnover is a problem endemic to the consultancy sector, organizations can minimize the rate of departure through their own professional management systems. The retention practices most often employed by consultancy companies are based on a high level of investment in training and developing the skills of their professionals, trying development to a more accelerated career plan than that of companies in other sectors. These practices allow professionals to take on greater responsibilities and earn higher pay at a younger age than would be usual in other types of company. The main retention problem facing such organizations is the headhunting of experienced professionals by other companies, which take advantage of the high level of

Running Head: Topics of Human Resource Management BUS 9300

investment in recruitment and development seen in the consultancy sector to capture such professionals before the company which first recruited them has seen a return on the investment made. Thus, in addition to the resources dedicated by such companies to communications in the context of their recruitment policy, and their investment in training tied to a political development policy, consultancy organizations generally structure their retention practice through the development of a career path for their professionals. This career path uses to be swifter than that seen in other sectors, leading to a continuous process of formal promotion and pay rises, which is superior to the market average. Within this context, these companies follow a routine of establishing the aim of matching the period for promotion from junior consultant category to senior consultant to the actual time required for junior consultants to acquire the combined knowledge and experience needed, a period which ranges from two to five years. The formal flow of promotions will nonetheless depend on the existence of vacancies at senior level. This will in turn be determined by the external demand for projects, or forecast turnover. One final decision making rule established within this practice would be that of maintaining a relative salary level which is consistent with the strategy followed by the organization.

References: Akinnusi, D. M. (1991), Personnel management in Africa: a comparative analysis of Ghana, Kenya and Nigeria, In C. Brewster and S. Tyson, (eds) International Comparisons in Human Resource Management,. 159-172. Pitman, London. Applebaum, E., Bailey, T., Berg, P. and Kalleberg, A. (2000), Manufacturing Advantage: Why High Performance Work Systems Pay off, Cornell University Press, Ithaca, NY. Kochan, T. and Osterman, P. (1994), The Mutual Gains Enterprise, Harvard Business School, Boston, MA. Asante Yaw (2000), Determinants of private sector investment behaviour in Ghana, University of Ghana Hodgson, G. M. (2006). What are Institutions? Journal of Economic Issues, 40(1), 1-25.

Running Head: Topics of Human Resource Management BUS 9300

Kamoche, K. (1997), Managing human resources in Africa: Strategic, organizationaland epistemological issues , International Business Review 6(5) 535-568 Pfeffer, J. (1994), Competitive Advantage through People, Harvard University Press, Cambridge, MA. Prahalad (2009), The Fortune at the Bottom of the Pyramid: Eradicating poverty through profits, Wharton School publishing Upper Saddle River NJ. Pitcher, A. (2002), Transforming Mozambique: The Politics of Privatization, Cambridge University Press, Cambridge. Storey, J. (1992), Developments in the management of human resources. Oxford: Blackwell Storey, D.J. (1985), Small firms in regional economics development, Cambridge University Press, Cambridge. Storey, J. (2001), "Human resource management today: an assessment", in Storey, J. (Ed.), Human Resource Management: A Critical Text, Thomson, London. Taylor, H. (1992), Public sector personnel management in three African countries: current problems and possibilities, Public Administration and Development 12, 193-207.